When it is time for a person to purchase a home many things need to be considered in order for it to be affordable. The largest expense for an average family is their housing costs. When you purchase a home it will probably be the largest purchase you will ever make which makes it extremely important to give a lot of thought to what you can afford, and these FHA home financing ideas may help.
Even though you may qualify for a large loan that does not mean that you want to take that amount. There are factors that mortgage lenders do not consider about your lifestyle and money choices that you need to think about when considering how much you want to pay into your monthly housing payment. Here are some things you should always consider when taking out a mortgage loan:
• How much can you really afford? If you are approved for a $400,000 loan do you really want to purchase a $400,000 home? Along with that large price tag comes large tax bills, maintenance, and depending on the area you are in, it may take a while for you to sell a high priced home in the case you choose to resell the house.
• What type of lifestyle do you enjoy? Many people are house poor because they allowed themselves to get carried away and take a large loan amount that they can barely afford. Now they better like the home they purchased because they are not going to be going out much because they are spending all their extra money on their home. If you enjoy eating out, vacationing, shopping, or other luxuries that are costly make sure you consider these expenses when you are budgeting how much you can afford for your monthly mortgage payment.
• Do you have any expensive hobbies? If you like to go boating, skiing, sky diving, or any other costly extra curricular activities you should consider these as expenses when you are tabulating how much of a mortgage payment you can afford. The more pricey the hobbies you have are, the less money you should spend on your home unless you are willing to give them up.
• How secure is your job, and do you work in a field where jobs are readily available? If you are not sure about what your employment status will be in the future, you should consider taking out a mortgage that will be affordable even if you have to take a lower paying job. This will also allow you to save up some rainy day money in case you are unemployed for any period of time.
• How much do you need to save for the future? Consider how much a month you would like to put away for savings, retirement, and other long term goals. Figure your monthly budget without this money when you are considering how much to spend on your mortgage payment.
• Do you have a large family or expect to start a family? Children are extremely expensive at all ages. Once you have children you may want to begin college funds, take out larger amounts on your life insurance policies, or other family related expenses that you may not have right now. Consider future expenses when you are budgeting for your monthly mortgage payment.
• Think of any future expenses. Are you going to get insurance for your mortgage in case something happens to you like death or disability? Are you planning to get a new car payment soon, and with that how much will your car insurance increase? You should always keep in mind possible expenses in the future in order to really be prepared for your financial circumstances and know how much home you can afford.
27 Responses to “What Mortgage Payment Can You Afford?”
[...] What Mortgage Payment Can You Afford? There are factors that mortgage lenders do not consider about your lifestyle and money choices that you need to think about when considering how much you want to pay into your monthly housing payment. Here are some things you should … [...]
I am so glad that you all include vital information on your website. This will be my first home and I am trying to get things in order so that I can receive the best deal for the amount of the loan. Thanks Guys
A very well written article. Thanks for the good tips!
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I don’t think it is wise for one to take a loan while in a financial crisis. I have seen people in such a situation seeking loans thinking they could get out of the rut, but only aggravate it further.
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Find out exactly how much money you’ll be borrowing and how long you want to spend paying it off. Paying off loans quickly is more advantageous to you since the longer your loans have outstanding balances, the more you’ll pay in interest in the long run.
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Very good information about loans. Not all ppl think about these things.
Great post. It nver ceases to amaze me how people usually try to buy a larger home than they can actually afford. On top of that they awalys want to put donw as little as possible. I guess its the American Way but its totally crazy. Thats why ARMS and Option ARMS were so popular a few years back because they allowed people to buy bigger and now look at the result.
Very good info. I think its important to pay close attention to the affotability factor when buying a home.
Im in the mortgage biz and I try to get people to understand that bigger is not always better buy it still ceases to amaze me how custoemrs insist on buying the biggest possible home.
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The prices for real estate are on a low level since the financial crises came. Good times to buy a new home, but even now there are banks giving credits to people who cannot afford it. One should always calculate if it is reasonable to buy big houses or to go with a smaller size.
Great article, TRy Homebuying Tools — Calculators. Easy to use mortgage tools to help you establish your financial situation, determine how much house you can afford and the maximum price that you should be considering.
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